Investing.com — Most Asian currencies fell further on Tuesday, with the Chinese yuan hitting a one-year low, as markets assessed the impact of new US export restrictions on China’s semiconductor industry.
The US is about to implement its third major crackdown on China’s semiconductor industry, targeting 140 entities with new export restrictions aimed at restricting China’s access to advanced chips and equipment essential for artificial intelligence and other limit high-tech applications.
The move, seen as a direct challenge to China’s technological ambitions, caused volatility in regional currency markets, especially for the Chinese yuan.
This comes at a time when sentiment around regional currencies had already dampened following newly elected US President Donald Trump’s recent threat to impose 100% tariffs on goods from the BRICS (Brazil, Russia, India, China and South Africa) when they move. to undermine the US dollar by creating or supporting alternative currencies. He previously promised that he would impose additional tariffs on China.
China’s yuan hits one-year low after new US export restrictions
The Chinese yuan fell against the dollar, with the onshore pair rising 0.3% to the highest level since mid-November 2023.
The latest export restrictions are expected to exacerbate China’s challenges in its pursuit of technological self-sufficiency, further dampening investor sentiment toward the yuan.
Markets across the region are closely watching the US-China trade situation, with fears of further restrictions or retaliation adding to volatility.
The Australian dollar, which is sensitive to the Chinese economy, weakened slightly while the pair remained close to a four-month low. Australian third quarter data will be released on Wednesday.
The strength of the dollar is putting further pressure on Asian currencies
Asian currencies have also faced downward pressure from the dollar, which rose in value for eight consecutive weeks before falling in the latest week. Expectations of a slower rate-cutting path due to persistent inflation and the likelihood that inflation will remain high with President Trump incoming have supported the dollar.
Extended earnings rose 0.1%, while earnings also rose 0.1%.
The South Korean won pair, heavily influenced by semiconductor exports, remained largely unchanged. South Korean consumer inflation was softer than expected for November, keeping the prospect of further interest rate cuts by the Bank of Korea in play.
The Japanese yen rose 0.4%, and the Taiwan dollar edged 0.2% higher, while India’s was muted.
The Philippine peso pair was largely unchanged at 58.685 per US dollar.
The Philippines has revised its economic growth forecast for 2024, lowering the target from 7% to 6.0% to 6.5%. The adjustment comes amid ongoing domestic and global uncertainties, according to a government panel. In addition, the peso’s projected average for 2024 has been adjusted to a range of 57.00–57.50 per dollar, from the previous estimate of 56.00–58.00.
